SMSF Advice Options

At June 2015 the ATO advised that there were 556,998 self-managed super funds in Australia with 1,049,840 members. During the 2015 financial year 32,073 funds were established and 1,350 funds closed (by either the members or ATO).

On 1 July 2016 the accountants’ exemption was repealed and ‘Recognized Accountants’ can no longer recommend the establishment or winding up of a self-managed superannuation fund unless they are appropriately licensed. Previously Regulation 7.1.29A of the Corporations Regulations 2001 permitted this without being licensed. If you now recommend a client establishes or winds up an SMSF without being appropriately licensed, you will be in breach of the law and could be liable for significant penalties. This includes the provision of related advice, such as a recommendation to commence a pension or make additional superannuation contributions.

Practices really have three SMSF advice options available to them. Firstly, become licensed and apply for and obtain your own limited (or full) AFS licence. Secondly, become an authorised representative of another entity’s AFS licence. Or thirdly, just refer the clients to an appropriately licensed entity or individual (this can include joint venture arrangements).

The Institute of Public Accountants believes that most practices will start referring the bulk of SMSF matters to financial advisors due to the risk, cost and educational requirements of becoming a licensee. As the annual costs of being an AFS licensee or authorised representative is between $4,000 – $15,000 it is only really worthwhile for practices with a big SMSF client base.